Wednesday, January 18, 2012

Good News about CAP Educational Plan in the Philippines

A Pinoy Money Talk member by the name abbeytuds shared her good news.

She said that she went to CAP’s Makati office this week to inquire about her sister’s claims. CAP is still alive, according to her, and although there were only very few staff there, they were accommodating.

The good news is, she was offered payment for the educational Plan ECU-A that her sister fully paid (gross price: P155,560). These were the payment options given to her.

Option 1: Tuition Fee Reimbursement

Maximum reimbursement per semester = P19,759

Total receivable amount for 4 college years = P158,072

Check release takes 1-2 months processing

Option 2: Plan Surrender

Check release every 3 months = P7,778

Total of 20 payments for 5 years

Total Receivable amount for 5 years = P155,560

If the beneficiary of the plan is just about to enter college and the tuition is more or less P19,579.00, Option 1 is definitely the better choice. For the duration of the student’s college years, the tuition will be fully covered.

If, however, the tuition is way lower than P19,579.00 per semester, it might be better to take Option 2. Assuming that the tuition every sem (i.e., every 6 months) is P10,000.00, with Option 2, during the same 6-month period, you can get a total of P15,556.00 (P7,778 * 2). Use P10,000 to pay the tuition then the remaining P5,556 can be used for other expenses.

In Option 2, since it offers only tuition reimbursement, any extra fund beyond the reimbursed tuition cannot be encashed. That means, if tuition per sem is P10,000, you won’t be able to receive the extra P9,759.

If CAP requires that Option 1 can only be taken if the beneficiary will enter college and that this plan cannot be assigned to another person, then there is no other choice but to take Option 2.

In Option 2, although the total amount to be received after 5 years (P155,560) is similar to the total gross price of the plan (P155,560), the planholder still lost because of the time value of money. With rising inflation, the P155,560 total amount to be received is, in real terms, way lower than this amount. What this means is that it would be better to get all that money right now than later.

In any case, this is still good news for planholders who thought there is no more hope for them with regard to their CAP educational plans. Getting something is, of course, better than getting nothing.